RDU, Orange County benefit from Wells Fargo settlement

Wednesday

Oct 3, 2012 at 12:01 AMOct 3, 2012 at 9:51 AM

McClatchy News Service

Officials at Raleigh-Durham International Airport don't have any evidence that they were cheated back in 2001 when they invested in financial instruments called municipal derivatives, but this week they accepted their modest share of a $148 million bid-rigging settlement negotiated last year by state and federal regulators across the country.

The RDU board agreed Monday to accept $194,343 from Wells Fargo & Co. It's part of about $2 million the bank will pay out to 16 local governments and nonprofit institutions across the state. The list includes Orange County, where officials expect to receive about $21,500 from Wells Fargo.

The U.S. Justice Department said in December that Wachovia Bank had admitted responsibility for illegal activity by employees between 1998 and 2004, before the Charlotte-based bank was acquired by Wells Fargo in 2008.

Regulators said Wachovia and other banks colluded illegally by agreeing what they would bid on contracts to sell municipal derivatives, which are used to invest money from bond proceeds until they are needed for public projects.

Jim Tatum, RDU's attorney, said Wachovia was the high bidder among six or seven institutions on about $10 million the airport invested in 2001, in connection with a bond issue that financed a parking garage project. Wachovia won the contract by pledging to pay RDU 6.12 percent a year for 30 years.

"There's nothing in the evidence as far as we can determine that indicates there was specific, actual collusion by anybody related to that transaction," Tatum said.

But RDU benefited from the settlement after investigators concluded that it was among the agencies and governments that Wachovia had defrauded. The implication was that honest, competitive bidding would have pushed the interest rates higher, to RDU's benefit.